Tag Archives: Chennai real estate news

The highways department has finalised the alignment of the new link road between East Coast Road (ECR) and Old Mahabalipuram Road (OMR). The final decision was made by a steering committee with top officials from the highways, Chennai Metropolitan Development Authority (CMDA), Chennai Corporation and police.

The new road will begin at Neelankarai on ECR, cross Buckingham Canal and join OMR opposite the Pallavaram-Thoraipakkam Road junction.

Though the alignment was part of the Chennai Metropolitan Transport Authority’s master plan in 2008, a private consultant was appointed to study the feasibility of the project. The consultant carried out traffic studies and found that there is an urgent need for a road at this junction.

There are no roads connecting OMR and ECR apart from Kalaignar Karunanidhi Road in Sholinganallur and West Avenue Road in Thiruvanmiyur. These two roads are 10km apart.

“Earlier there was a small bridge that we used to cross the canal. But it was closed a few months ago. Now we have to go all the way to Sholinganallur and then come back,” said V Srinivasan, a bank manager who lives in Thoraipakkam. “Not only is this a 10km detour but it takes half an hour just to cross the Sholinganallur signal.”

Unchecked real estate growth has been rampant in this area and may delay land acquisition process, say officials. At least 100 houses built illegally have to be demolished. Of the two options available — to go by the master plan or chart a new course through vacant land — the government has chosen the tougher one. This will give them legal leeway when it comes to land acquisition.

The highways department estimates land acquisition to cost around 100 crore for an estimated 42,000sqm that it will have to acquire. Around 30,000sqm of this land is owned by private individuals with legal deeds.

“Though most land owners have pattas, buildings on the eastern side of the canal do not have approval,” a highways official said. “People constructed buildings in violation of the master plan.”

The western side of the canal is mostly vacant and should the highways department should not have any problems with land acquisition along the stretch.

“Once the plots are identified, land acquisition will begin. Unlike earlier projects, construction will begin only when land acquisition is completed,” the official said. Officials expect the land acquisition process to last at least two years and say laying the road will take a year to complete.

After a slump during last fiscal when real estate purchases fell 23.54%, property registration in Tamil Nadu appears to be clawing back with a 11% growth in registrations in April-May 2013.

The government of Tamil Nadu raised guideline values sharply — the base price at which a property is registered– effective April 1, 2012. This coupled with high lending rates impacted new home buys. With no signs of a rollback on guideline rates and mortgage rates showing signs of easing, property registrations appear to pick up. New property registrations were homogenous and spread across the state, data from the state’s registration department showed. Registrations in April-May stood at 4.47 lakh as against 4.03 lakh a year ago, a rise of 10.87%.

“There was a definitive slowdown. Besides, February and March are months where companies race to achieve their sales targets which could have compromised on prices. But we are witnessing a definitive improvement in both sentiment and sales.

Chennai lead with 18.9% growth in property deals. Southern sub-urban areas like Medavakkam, Pallikaranai, Neelankarai, Guduvancherry, Tambaram and Tiruporur witnessed strong growth. The other hot-spots were Siruthavur, Panaiyur and Kelambakkam off Vandalur and East Coast Road, data showed. Thanjavur and Salem recorded 17.24% and 14% growth respectively in property deals. The registration of documents hovered around 27 lakh to 35 lakh till 2008, and fell to 26 lakh last year.

“The past two months have been fairly good in terms of new sales. We tend to believe that the downward bias has been halted.”

Sales in drought hit delta districts were brisk. The agricultural lands in delta districts were lapped up as hot cakes. Thanjavur region, comprising of Nagapattinam, Pattukkottai, Myladuthurai, Kumbakonam has recorded good growth. “At least 50% of the sale is registered against agricultural lands and the rest in urban areas,” said a district officer in Thanjavur. The proximity to NH7 and NH45, the busiest national highways, are attracting buyers to the industrial corridor of Salem, particularly Hosur.

“With too many choices around, buyers are doing window shopping. The sale will pick up”. With the National Housing Bank (NHB) Residex, that tracks on the housing prices in cities suggesting fall in real estate prices of several areas in Chennai region, the demand will soon pick up. “There is a high rise in first time buyers.

In the Western parts of the state, property buying was strong in Namakkal and Thiruchengode towns, famous for ‘super schools.’

Chennai’s good economic density, progress in infrastructure development and growing influence of IT/ITeS has enhanced sales in the realty markets. The Chennai property market showed a remarkable improvement seeing an average appreciation of 10-12 per cent in the residential sector across the city during past June-Nov 2012 period.

The Chennai realty segment witnessed location-wise appreciation in values. There was a fragmented demand-supply across locations and henceforth value appreciations.” Areas such as Thoraipakkam, Sriperumbudur, Medavakkam and Kelambakam noted an escalation of up to 20 per cent in residential property values in past six months and is still appreciating, he added.

“The new projects being launched in past one year is the key factor leading to elevated inventory level in realty markets,”The new segment offering variety of deals to the end users and in wide range of price brackets to choose from has created buzz in the property market. With options of investing in a luxury apartment to a sea-facing villa has fetched NRI’s, HNI’s and buyers and investors from different parts of the country, he added.

“Chennai’s supply of new residential units has tripled in Jul-Sep 2012 quarter as compared to the previous quarter.” Maximum new supply has been witnessed in Chromepet, Thirumallaivoil and Egmore in the mid‐segment price range of Rs 50 lakh onwards.

The new segment witnessed more number of transactions compared to the resale segment. “New residential units are equipped with all basic and luxury features which are missing in resale market and therefore it is more preferred,” says Gopal. The average capital values of newly launched apartments vary from Rs 3,200-4,500 per sq ft depending on location and other facilities.

Better infrastructure, availability of land parcel for development and relatively lower land prices as compared to Bangalore, Mumbai, Pune and Gurgaon makes Chennai an attractive destination for investment.

The Chennai Metropolitan Development Authority (CMDA) receives on average 5-6 applications for special buildings and one application for multistoried building every day. While the developers complain of inordinate delay in the approval process, the authorities counter stating that on many occasions complete documentation do not accompany the application in order to catch the deadline for submitting the application. After a series of meetings with the developers, the CMDA has now come out with unique software to simplify the planning approval process.

There are more than 1,000 rule parameters which are to be broken into sub-modules. It took time to understand the complexities involved in the whole system, says official sources in CMDA. Basically it works on the colour codes and text. Users’ manual has already been uploaded on the site which explains the aims and objectives of the software.

Though the colour codes have been reduced to 40 now, efforts still continue to reduce it further as there is scope for further improvement. All that the users should do is to follow the colour codes and texts in the prescribed format including font type and size. A few architects have already tested the software and found it user friendly. For the simple drawings, it will hardly take 5 minutes. The developers will have to adhere to the prescribed format and terms and conditions for computing FSI eligibility. In fact more than 60 files submitted earlier for special buildings and MSB have been checked by the CMDA and it tallies with the prescribed FSI norms.

A password will be provided to the users so that they can go the website, download it and use it. They can access the site any time to ascertain the status of their application. If correction is needed, it can be done immediately. The CMDA is still studying the security aspect of it as well. The consultant is in the process of fine-tuning the security aspects for uploading it on the website.

The CMDA has ensured to go live with the files after trial run of over 100 CDs with timings and drawings. Initially there was no pick up as developers did not submit the drawings in the prescribed format for the test run. In order to train the developers’ representatives, in-house training has been imparted and four batches have so far been completed. As a follow up exercise, CMDA will now approach the Institute of Architects to arrange for a similar training exercise.

After the test run is over, CMDA will formally launch the Automated Planning Permission Application Scrutiny (APPAS) software which is likely to take another 1-1.5 months. However, developers can submit the applications even now in the new software format. The CMDA feels that considerable time, man-hours and commuting to the authorities would be saved once the implementation is successful.

The trend in the absorption of retail space in malls remained dormant in third quarter as limited options in existing malls have made the city’s high street locations more attractive to retailers. However, with significant amount of mall space in the advanced stages of construction, preleasing in upcoming malls is taking place at a brisk pace. Therefore, the malls scheduled to become operational over the coming quarters are expected to open with good occupancy levels, according to a survey by Jones Lang LaSalle.

Vacancy rates in third quarter remained stable at 11.2 per cent given the lack of major leasing activity in the quarter. They have been declining for the past year as Chennai has seen no new malls entering the market for almost 12 months now.

During third quarter, Pothys, a large Chennai-based department store, leased around 60,000 sq ft at GN Chetty Road in T Nagar. In addition, retailers such as Sony Center and Blackberry ready-made store opened stores in CBD locations, while a prominent eat-out outlet, Adyar Ananada Bhavan, opened a restaurant in Chrompet on GST Road.

Retailers on Chennai’s high streets have started preparing to cater to increased demand during the upcoming festive season, erecting temporary structures to accommodate their expanded product portfolios and extra inventory.

Supply

No new supply was added in third quarter, although a massive 2 million sq ft is expected to be on the market in the short-term as Prestige’s Forum Mall in Vadapalani, the Market City Mall and the PS Grand Mall in Velachery, and the Ten Square Mall in Koyambedu are all expected to become operational over the next six months.

Domestic macro-economic conditions and, more importantly, the lack of quality mall space resulted in no major transactions in the quarter, which in turn kept financial indicators stable. Nevertheless, with pre-leasing taking place at significantly higher rates, it is expected that rents may increase in the short term as the new malls become operational.

Cautious leasing by retailers largely kept high street rents stable, although emerging high street locations on GST Road, Velachery and the neighbourhood are expected to see rental growth in the short term.

With the ever increasing power deficit taking a toll on the economy, the Tamil Nadu government is planning to make it mandatory for major industries, high-rise apartment complexes, major institutions and hotels to meet 2% of their energy needs from solar sources. State environment minister B V Ramana said this on the sidelines of a meeting with the Tamil Nadu Pollution Control Board officials here on Monday. He said the environment department was debating the proposal, and it would be rolled out as a green initiative.

The proposal may lessen the burden on the Tamil Nadu Electricity Board, given the wide gap of 4,000 MW between demand and supply. Unable to supply power, the TNEB is imposing up to 12 hours of power cuts in many rural areas. “Solar system is cost intensive. Unless developers are given subsidies, it cannot be promoted. Only the enduser has to bear the cost.

A one KW solar panel with battery costs . 2.3 lakh and generates four units a day. A similar unit without battery costs . 1.2 lakh and generates five units.

Going Green

Tamil Nadu is facing a shortage of 4,000MW as on date

TNEB has been imposing 12-hr power cuts in some rural areas

Major industries, high-rises & institutions to be asked to meet 2% of their energy requirements through solar power

As demand rises, there may be a fall in cost of solar panels which now cost between 1.2 lakh and 2.3 lakh

The property values of East Coast Road (ECR) have crossed the mark of Rs 11,000 per sq ft at prime locations near beach and are still appreciating making it a top residential locality of Chennai. Visible expansion of IT/ITeS sector acting as the catalyst in the real estate growth. Revival of demand for luxury villas, increase in property prices and launch of new projects, all this has returned and bucking the Chennai’s submarket.

“Chennai is noting a continuous demand for luxury housing from quite some time now, primarily towards the peripheral locations of the city where premium homes are available at affordable values,”. The capital values of premium apartments and luxury villas have noted a hike of 10-15 per cent in past six months. The number of enquiries also showed an upward trend, seeing a hike of up to 25 per cent during the same period. The appreciation in property values can be attributed to the fact that it is primarily end-user driven rather than investors, he added.

The stretch from Palavakkam to Mamallapuram is the key hub seeing exponential demand and supply in the residential sector. These locations house projects in the premium category catering to HNIs, NRI’s and have demand for individual bungalows/villas priced at more than Rs 2 crore.

“Rental sector is too flourishing and have noted a significant appreciation of more than 30 per cent in recent past.” The rental values of a fully furnished 4-5 BHK villas/independent houses varies from Rs 60,000-90,000 per month depending on its location and proximity to neighbourhood beach.

ECR strategic situation near to the IT corridor is the major USP of the area. Enhanced demand from expats and HNI’s visiting to city for professional reasons are the major contributor in the upward rental and capital sector. On an average, the capital values at ECR vary from Rs 2,000-6,000 per sq ft depending upon location and connectivity. Residential land is also the next most transacted category after luxury villas, sums up Kumar.

Improved connectivity level, transportation and other infrastructural activities have created spurt in the upcoming housing projects in the suburban areas such as ECR. Looking at the prevailing demand and supply ratio, it is expected that the submarket will continue to witness positive trend in values.

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